Sioux Falls might scale back housing initiative because of foreclosures

Aug. 26, 2013

Craig Markhardt

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Homebuyers Assistance

WHAT IT IS: No-interest deferred payment loans are provided for part of the down payment and closing costs associated with buying a home. Household income must be no greater than 80 percent of median family income. 29: Projects completed last year $4,895: Average loan $76,334: Average purchase price $36,199: Average household income (63.5 percent of median family income) 2.5: Average number of persons per household 4: Families with five or more members 13: Households headed by women 1: Disabled household 31: Average age of head of household 27: White (including three of Hispanic origin) 1: African-American 1: Native American/Alaskan Native and white Source: City of Sioux Falls

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The city of Sioux Falls affordable housing programs aim to get people on their feet with a comfortable place to live. But like many homeowners, even those with help sometimes struggle to stay afloat.

After some homeowners struggled with foreclosures in the past, the city is refocusing its homebuyers assistance program to target those who are better equipped to hold on to their homes once they move in.

“We want to try to find folks who will be more successful homeowners, long term,” said Al Roettger, the city’s community development program specialist.

He said the city hasn’t delved too deeply into the details of how to change the program, but it probably will mean that fewer people are served with the city’s homebuyer assistance.

The city uses federal funding from the U.S. Department of Housing and Urban Development and typically provides qualified homebuyers with up to $5,000 for the down payment and closing costs.

Where the city served close to 30 households through the program in each of the past three years, Roettger said officials expect to narrow that to about 10 homebuyers in the coming year.

The city might change the amount of money it provides to each person. Roettger said the important part is that they want to see people with consistent employment, consistent income and emergency savings so if something breaks down at the new home, they have money to tackle repairs.

“With a lower-income homebuyer, when they run into an issue … that increases the chance of a foreclosure significantly,” said Craig Markhardt, a mortgage banker with Advana Mortgage.

He has directed qualified homebuyers to the city’s assistance program in the past.

“I think that’s a great program,” he said, adding that he agrees with the city’s efforts to refocus the program and assess its risk level.

Markhardt hopes to work with the city using the Energy Efficient Mortgage program. The national program allows borrowers in South Dakota to get a loan with as little as 3.5 percent down payment and up to $8,600 toward the cost of energy-saving improvements. That helps reduce the risk of a homeowner going through foreclosure after a major breakdown such as a furnace going out, Markhardt said.

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“It would help them take care of major expenses they might bump into,” he said.

Homeownership programs have been a greater focus of the city in the past five to seven years. Roettger said that’s because of a lack of funding for affordable housing projects. While the city did more of such projects in the late 1990s, which he thinks were successful, planning for another is in the works. Construction of a smaller housing complex, with 20 to 40 units, probably wouldn’t start until late 2014.

About 3,700 households are on the list for affordable housing, which can mean a wait of four or five years.

Shireen Ranschau, executive director of the Sioux Falls Housing and Redevelopment Commission, said her organization has a few affordable housing projects underway.

Opening in the first part of November, the Spring Center west of downtown will have 31 apartments for those who make 30 percent, 40 percent or 50 percent of the median family income. Duluth Heights, remodel project of an 11-unit building at 12th Street and Duluth Avenue, will target those at 30 percent and 40 percent of the median family income.

Two other projects are in the works for early next year: a four-plex at Third Street and Spring Avenue and a complex with one bedroom apartments for those 55 and older at the corner of Highland Avenue and Fifth Street.